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Aren’t You Ashamed?

Mar 5th, 2009 by IrvineRenter 

How do owners react when REOs devastate the comps? How about listing their houses at WTF asking prices and hoping for the best. They really should be ashamed of themselves.

Today's property is one of two recent listings on the same street as last week's distressed property. The only difference is a doubling of the asking price. WTF?

35 Crimson Rose 35 Crimson Rose inside

Asking Price: $2,195,000

Address: 35 Crimson Rose, Irvine, CA 92603

We are scheduled to have an IHB Block Party on Monday, March 9, 2009, at J.T. Schmids at the District. Come out and meet with everyone from the IHB.

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Posted in Mortgage Fraud

Irvine’s Median Property

Feb 17th, 2009 by IrvineRenter 

People have different ideas on what a median property looks like in Irvine. Based on its sales history, today's featured property certainly qualifies.

26 Bunker Hill

Asking Price: $580,000

Address: 26 Bunker Hill, Irvine, CA 92620

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Houses and Commodities Trading

Mar 11th, 2008 by IrvineRenter 

Houses and Commodities Trading

Commodities are items of value and uniform quality produced in large quantities and sold in an open market. Although every residential real estate property is unique, these properties became uniformly desired by investors because all real estate prices rose during the Great Housing Bubble. The commoditization of real estate and the active, open-market trading it inspires caused houses to lose their identity as places to live and call home. Houses became tradable stucco boxes similar to baseball playing cards where buying and selling had nothing to do with possession and use and everything to do with making money in the transaction.

In a commodities or securities market, rallies unsupported by valuation measures will fall back to fundamental values. It is very clear the rally in house prices was not caused by a rally in the fundamental valuation measures of rent or income. Many people forgot the primary purpose of a house is to provide shelter — something which can be obtained without ownership by renting. Ownership ceased to be about providing shelter and instead became a way to access one of the world’s largest and most highly leveraged commodity markets: residential real estate.

Commodities markets are notoriously volatile. In fact, this volatility is the primary draw of commodities trading. If market prices did not move significantly, traders would not be interested in the market, and liquidity would not be present. Without this liquidity, hedgers could not sell futures contracts and transfer their risk to other parties, and the whole market would cease to function. Commodities markets exist to transfer risk from a party that does not want it to a party who is willing to assume this risk for the potential to profit from it. The commodities exchange controls the volatility of the market through the regulation of leverage. It is the exchange that sets the amount of a particular commodity that is controlled by a futures contract. They can raise or lower the amount of leverage to create a degree of volatility attractive to traders. If they create too much leverage, trader’s accounts can be wiped out by small market price movements. If they create too little leverage, traders lose interest.

The same principles of leverage that govern commodities markets also work to influence the behavior of speculators in residential real estate markets. If leverage is very low (large downpayments or low CLTV limits,) then speculators have to use large amounts of their own money to capture what become relatively small price movements. If leverage is very high (small downpayments or high CLTV limits,) then speculators do not have to put up much money to capture what become relatively large price movements. The more leverage (debt) that can be applied to residential real estate, the greater the degree of speculative activity that market will see. Also, the smaller the amount of money required to speculate in a given market, the more people will be able to do so because more people will have the funds necessary to participate. When lenders began to offer 100% financing, it was an open invitation to rampant speculation. This makes the return on investment infinite because no investment is required by the speculator, and it eliminates all barriers to entry to the speculative market. In a regulated commodities market, the trader is responsible for all losses in their account. In a mortgage market dominated by non-recourse purchase money mortgages, lenders end up assuming liability for losses in the speculative residential real estate market. This is a fantastic deal for speculators; for the lenders... not so much.

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Today's featured property is a classic example of speculation in the residential real estate market. When this seller was a buyer, they utilized 100% financing right at the peak of the bubble. Now that resale values have gone south, the speculator is letting the property go into foreclosure, and the lender is going to be left holding the bag.

63 Copper Leaf Front63 Copper Leaf Kitchen

Asking Price: $575,000IrvineRenter

Income Requirement: $143,750

Downpayment Needed: $115,000

Monthly Equity Burn: $4,791

Purchase Price: $733,000

Purchase Date: 10/5/2006

Address: 63 Copper Leaf, Irvine, CA 92602

Beds: 3
Baths: 3
Sq. Ft.: 1,656
$/Sq. Ft.: $347
Lot Size: -
Type: Single Family Residence
Style: Other
Year Built: 1999
Stories: Two Levels
Area: West Irvine
County: Orange
MLS#: P624528
Status: Active
On Redfin: 11 days

Terrific Location in Irvine--conveniently close to parks, schools, shopping, dining and entertainment. Beautiful landscape/hardscape done by professionals in the backyard. Hardwood floors throughout first floor.

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If the lender gets the asking price on this one, they stand to lose $192,500 after a 6% commission. This also assumes the borower is current on the mortgage and there is not a large amount of deferred payments adding to the balance due. All part of the price these lenders paid for enabling people to trade houses as commodities and assuming the risk of loss.

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Nine Inch NailsGod money Ill do anything for you.
God money just tell me what you want me to.
God money nail me up against the wall.
God money dont want everything he wants it all.

Head like a hole.
Black as your soul.
Id rather die than give you control.
Head like a hole.
Black as your soul.
Id rather die than give you control.

Bow down before the one you serve.
Youre going to get what you deserve.
Bow down before the one you serve.
Youre going to get what you deserve.

God moneys not looking for the cure.
God moneys not concerned with the sick among the pure.
God money lets go dancing on the backs of the bruised.
God moneys not one to choose
No you cant take it
No you cant take it
No you cant take that away from me

Head Like a Hole -- Nine Inch Nails

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Deodar of Destruction

Jun 12th, 2007 by IrvineRenter 

23 Deodar Front

Asking Price: $380,000

IrvineRenterPurchase Price: $515,000

Purchase Date: 10/12/2006

Address: 23 Deodar, Irvine, CA 92604

Beds: 2
Baths: 2
Sq. Ft.: 1,000
Lot Sq. Ft.: 2,800
Year Built: 1976

Knife Catcher Award

Stories: 1
Type: Condominium
County: Orange
Neighborhood: El Camino Real

$/Sq. Ft.: $380
MLS#: S485757
Status: Active on market
On Redfin: 40 days

From Redfin, "Single story home in a corner lot overlooking a huge greenbelt. Beautifully remodeled throughout. This is an as is short sale."

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This short sale price will probably not be approved by the lender as it is too far outside of their loss limitation guidelines. It is probably priced this low to entice bids in order to give the bank an idea of where the market will be after they take the property back in foreclosure. The bank will lose money, but they will follow their guidelines for loss mitigation which will not permit a 30% haircut after a little over 7 months.

In my opinion the real story here is probably in the sale history:

Sales History
Date Price
10/12/2006 $515,000
10/27/2005 $465,000
08/01/2000 $218,000

It appears to me the buyer on 10/12/2006 was a straw buyer bailing out the 10/27/2005 buyer. The $515,000 sales price, after a 6% commission, would net this seller $20,000 -- enough for a payment to a straw buyer and/or the person who arranged the sale. This is pure speculation on my part, and the previous seller may simply have gotten lucky, but when you see a short sale after 7 months, it is probably a first-payment default fraud. This may be a flip gone flop, or it may be fraud, either way this never should have transacted at a price over $500,000, and its next transaction (after the bank buys it at a foreclosure auction) will likely be less than the 2005 price.

The sellers who will really be displeased by this whole mess are the neighbors. The above sale won't feed their fantasy price, but then again, they probably will ignore its significance as an aberration, drink some kool aid, and deepen their denial.

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13 DEODAR
Irvine, CA 92604

Price: $565,000

Beds: 3
Baths: 2
Sq. Ft.: 1,178
Lot Sq. Ft.: 3,035
Year Built: 1976
Stories: 1
Type: Condominium
County: Orange
Neighborhood: El Camino Real
$/Sq. Ft.: $480
MLS#: P579755
Status: Active on market
On Redfin: 7 days

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19 DEODAR
Irvine, CA 92604

Price: $585,000

Beds: 3
Baths: 1.5
Sq. Ft.: 1,517
Lot Sq. Ft.: 2,112
Year Built: 1976
Stories: 2
Type: Condominium
County: Orange
Neighborhood: Orangetree
$/Sq. Ft.: $386
MLS#: P572471
Status: Active on market
On Redfin: 49 days


Fraudera Ranch: It’s a Family Affair

Feb 6th, 2007 by zovall 

Just a quick note to check out the recent story on ocrenter's blog: Fraudera Ranch: It's a Family Affair. The tactics used here may be pretty similar to the fraud I uncovered last year.

Let's get some exposure to what ocrenter, Graphrix, Anon Investigator, and Ladera Mom have uncovered! Here's a link to Digg their story: Fraudera Ranch


Posted in Mortgage Fraud